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So This Is Freedom? They Must Be Joking.

Amid protests from the nation’s governors over the costs of
President Barack Obama’s still-unpopular health law, often known as
ObamaCare, the president announced last week he is willing to give
states more flexibility to implement it. As proof, he endorsed a
bill by Sens. Ron Wyden, D-Ore., and Scott Brown, R-Mass., that
would in fact do just that.

If you think that means the president was himself exhibiting
flexibility, you would be wrong. Despite the rhetoric about
compromise, what the president actually did was offer states the
option of replacing his law with a single-payer health care system
three years earlier than his law allows.

ObamaCare already allows states to apply for a five-year “waiver
for state innovation.” If the secretary of Health and Human
Services approves the waiver, then in 2017 a state can use the
subsidies its residents would have received to launch its own
approach to reform. The Wyden-Brown bill simply moves that date up
to 2014.

Echoing the law’s supporters, industry analyst Robert Laszewski
called Obama’s endorsement a “put up or shut up” moment for
opponents, who must now either prove that their reforms perform
better or quit their complaining.

If only.

Any waiver process that amends federal laws on a state-by-state
basis — such as proposal advanced in 2006 by the Brookings
Institution and the Heritage Foundation, and introduced as
legislation by then-Sen. George Voinovich, R-Ohio, and still-Sen.
Jeff Bingaman, D- N.M. — will inherently favor big-government
proposals over free-market reforms. For example, states seeking
more-coercive approaches would have an easy time meeting whatever
performance metrics the federal government sets. They can simply
ramp up the mandates and subsidies until coverage levels or health
plan offerings meet the targets. Since a free market caters to
consumers’ preferences, which may deviate from the government’s
performance metrics, it would be far more difficult to get
free-market approaches approved or renewed.

Constitutional constraints would also block free-market reforms.
Any effort to reduce health care costs using market forces would
have to reform the federal tax exclusion for employer-sponsored
insurance and the Medicare program’s method of subsidizing
coverage. Altering the payroll-tax treatment of health insurance in
some states but not others would run afoul of Article I, Section 8:
“all … Excises shall be uniform throughout the United States.”
Allowing states and HHS to rewrite the tax code or the Medicare
statute would run afoul of Article I, Section 1: “all legislative
powers … shall be vested in a Congress of the United States.”

ObamaCare goes the extra mile by only permitting approaches that
are more coercive than itself. Its waiver provisions only apply to
that law’s private-insurance provisions, and require states to
preserve the law’s price controls prohibiting health rating, to
cover the same number of people, and to provide coverage as
comprehensive and subsidies as large as the new law does. These
restrictions completely bar free-market reforms.

For example, if you ask me, a free market could cover as many
people as ObamaCare. (At a minimum, it would provide better access
to care. I’ll save the “how” for another column.) But imagine
trying to demonstrate that a free market — where the idea is
generally to let people spend their own money on as much or as
little health insurance as they please — would cover as many
people as a law that forces them to buy coverage under penalty of
law. A government that believes it had to use coercion to reach
that baseline is unlikely to certify that freedom will do the
same.

The New Republic’s Jonathan Cohn agrees, writing that
Wyden-Brown “wouldn’t allow [Republicans] to enact the sorts of
health care reforms they would prefer.” Moreover, “Virtually any
workable state system relying primarily on private insurance would
end up looking something like the scheme envisioned by the
overhaul: Prohibiting insurers from discriminating against the
sick, compelling people to obtain insurance and then providing
subsidies so that everybody could afford coverage.”

The only reason to apply for a waiver would be if governors
wanted to ramp up the coercion to establish a single-payer health
care system. Only in Washington is it considered an act of
political compromise when the president encourages people who don’t
like his policies to adopt policies they like even less.

HHS Secretary Kathleen Sebelius has written that ObamaCare gives
states “incredible freedom” to implement the law. We now know what
she meant: states are free to coerce their residents even more than
ObamaCare requires. What’s incredible is that she calls that
freedom.